The Victorian Commissioner of State Revenue (Commissioner) is offering motor dealers the opportunity to voluntarily disclose “service demonstrator vehicles” or “service loan vehicles” for which a duty exemption was incorrectly obtained in the last five years.
Upon receiving the disclosure, the Commissioner will issue a reassessment and apply a reduced penalty tax rate of 5 per cent plus interest on any outstanding duty calculated from the date of the tax default to the date of reassessment.
Generally, duty is payable where a dealer applies for registration or transfer of registration of a motor vehicle, at the time the application is lodged.
An exemption from duty exists for an application relating to a motor vehicle which is to be used as:
- trading stock;
- a demonstrator vehicle; or
- trading stock and a demonstrator vehicle.
A ‘demonstrator vehicle’ means a motor vehicle used exclusively for the purpose of sale of another vehicle of the same class.
Motor vehicles used for a range of business or private purposes, including customer loans, service, workshop and deliveries, promotion and use by directors, employees and their family members are therefore not exempt from duty.
For example, in Mercedes-Benz Australia/Pacific Pty Ltd v Commissioner of State Revenue, the Court of Appeal held that ‘service demonstrator vehicles’ provided by the dealer to its service customers for use as loan cars were not exempt from duty.
Dealers must submit the disclosure on or before 30 September 2018. To qualify for the reduced penalty tax rate, the following must be included in the application:
- in respect of each motor vehicle, the make, model, year of manufacture and registration number as at the date of registration or transfer of registration by/to the dealer;
- the purchase price paid for each motor vehicle (inclusive of GST) together with a copy of the tax invoice; and
- any other material relevant to the voluntary disclosure.
The Commissioner is considering whether to investigate dealers’ compliance with the Duties Act 2000.
The Commissioner may impose a penalty of up to 90 per cent of the unpaid motor vehicle duty where a dealer has failed to make a voluntary disclosure supported by the required information by 30 September 2018.